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Copyright © 2005 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.

Chapter One

Introduction and Overview

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Management Tasks

• Strategic Analysis

• Innovation

• Multiple Business—Strategies and Issues

• Creating SCAs

• Developing Growth Platforms

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A Business StrategyA Business Strategy

Where to CompeteThe product-market investment decision

How to CompeteValue Assets & Function area

proposition competencies strategies and programs

Figure 1.1

A Business Strategy

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The Product-Market Investment Strategy

• Invest to grow (or enter a product market)

• Invest only to maintain the existing position

• Milk the business by minimizing investment

• Recover as many of the assets as possible by liquidating or divesting the business

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Vertical IntegrationVertical Integration

Product-Market Growth Directions

MarketPenetration

MarketPenetration

Product ExpansionProduct

Expansion

DiversificationDiversification

Source: H. Igor Ansoff, “Strategic Diversification”, Harvard Business Review, September-October 1957, pp.113-24

MarketExpansion

MarketExpansion

PresentMarketsPresentMarkets

NewProducts

NewProducts

PresentProducts

PresentProducts

NewMarkets

NewMarkets

Figure 2.4

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Overview of Strategic Market Management

External Analysis• Customer Analysis• Competitor Analysis• Market/submarket Analysis• Environmental Analysis

Internal Analysis• Performance Analysis• Determinants of strategic options

Strategic Analysis OutputsStrategic Analysis Outputs

Figure 2.1

Strategy Identification, Selection, and Implementation

Strategy Identification, Selection, and Implementation

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External and Customer Analysis

Chapter Two

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The Customer Value Proposition

Perceived benefit to customer:

• Functional

• Emotional

• Social

• Self-Expressive

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Customer Value Proposition Examples

• A good value

• Excellence on an important product or service attribute

• The best overall quality

• Product line breadth

• Innovative offerings

• A shared passion for an activity or a product

• Global connections and prestige

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Customer Analysis

Segmentation

• Identification of customers groups that respond differently from other groups to competitive offerings. Thus, a successful segmentation strategy requires the conceptualization, development, and evaluation of a competitive offering.

• Who are the biggest customers? The most profitable? The most attractive potential customers?

Figure 2.2

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Customer Analysis

Customer Motivations

• What elements of the product/service do customers value most?

• What are the customers’ objectives? What are they really buying?

• How do segments differ in their motivation priorities?

• What changes are occurring in customer motivation? In customer priorities?

Figure 3.2

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Customer Motivation Analysis

IdentifyMotivations

IdentifyMotivations

Group andStructure

Motivations

Group andStructure

MotivationsAssess

MotivationImportance

Assess MotivationImportance

Assign StrategicRoles to Motivations

Assign StrategicRoles to Motivations

Figure 2.6